This week, finished steel rebounded slightly after consolidating at lows, while coking coal and coke showed overall satisfactory performance. At the start of the week, with no significant changes in fundamentals or news, ferrous metals continued to consolidate at lows; in the second half, market rumors emerged that BHP’s union announced a work stoppage action. Expectations of short-term supply tightness from the potential stoppage, combined with rising energy costs due to Middle East conflicts, drove a rebound in iron ore prices, which in turn lifted ferrous metals; online auctions for coking coal showed mixed results...

[SMM Magnesium Market Analysis: Semi Coke Losses Raise Smelting Costs; China’s Magnesium Ingot Comprehensive Cost Rose MoM in June] At the end of May, a safety accident at the Qinyuan coal mine directly tightened the supply of raw coal in the region, rapidly driving up market coal prices. There was a significant time lag in the transmission of semi coke prices, and losses on production at semi coke plants intensified, substantially increasing the energy raw material cost for primary magnesium smelting. Enterprises mitigated fixed expenses such as plant and equipment depreciation by raising capacity, which only slightly alleviated cost pressure. The incremental cost impact from higher energy prices was stronger, pushing up the industry’s overall smelting cost. Processing profits at upstream plants continued to be squeezed, and profit margins narrowed for most enterprises.

★ Macro ★ 01 ★★ [Central Bank Net Withdraws 85 Billion Yuan via Open Market Operations] The central bank today conducted a 15 billion yuan 7-day reverse repo operation, with a bid amount of 15 billion yuan and a winning amount of 15 billion yuan, at an operation rate of 1.40%, unchanged from the previous level. As 100 billion yuan of 7-day reverse repos expired today, a net withdrawal of 85 billion yuan was achieved. 02 ★★★ [A Member of Iran's Revolutionary Guard Killed Repelling Drone Attack] According to Iranian local time on the 8th, the Navy of Iran's Islamic Revolutionary Guard Corps stated that earlier that day, a naval member of the Islamic Revolutionary Guard Corps was killed in the process of responding to an incoming drone in the Mahshahr region of southwestern Iran. On the 8th, the Islamic Revolutionary Guard Corps issued a statement saying that the U.S. military launched airstrikes in the early morning on coastal areas of Iran's Hormozgan Province and some coastal bases and non-military facilities in Mahshahr, violating the ceasefire agreement and breaching the Islamabad Memorandum of Understanding. ★ Industry and Downstream ★ 01 ★★ [CPCA: June Retail Sales of China's Passenger Car Market at 1.602 Million Units] CPCA data showed that retail sales of China's passenger car market in June were 1.602 million units, down 23.2% YoY but up 6.1% MoM. Year-to-date retail sales reached 8.701 million units, down 20.2% YoY. In June, retail sales of internal combustion engine vehicles fell 39% YoY, with pure gasoline cars down 42% and conventional hybrids down 7%. Among combustion engine vehicles, domestic brands fell 39%, mainstream joint ventures fell 39%, and luxury brands fell 39%, all indiscriminately hit by the sharp impact of high oil prices. June retail sales of new energy vehicles fell 9% YoY, with domestic brands down 11%, mainstream joint ventures up 45%, and luxury brands down 11%. The retail sales of domestic economy EVs were significantly impacted by the sharp decline in subsidies. 02 ★★ [H1 Excavator Sales Up Over 26% YoY] Data from the China Construction Machinery Industry Association showed that in June, total excavator sales reached 25,400 units, up 35.3% YoY. Of this total, domestic sales came to 10,900 units, up 33.9% YoY, while exports stood at 14,500 units, up 36.4% YoY. Based on H1 data, since March, excavator sales have exceeded 20,000 units for four consecutive months, with March sales reaching 37,400 units, the highest monthly sales since May 2021. Cumulative sales in the first half reached 152,300 units, up 26.4% YoY. China domestic sales reached 79,000 units, up 20.4% YoY, while exports totaled 73,300 units, up 33.5% YoY. The loader market also sustained its high growth trajectory, with the industry recovery gaining broad-based momentum. Data shows that loader sales across all types reached 15,000 units in June this year, up 24.9% YoY. Cumulative sales of all loader types hit 82,100 units in H1 this year, up 26.7% YoY. 03 ★★ [ Yuxi Xianfu Coke Project Expected to Begin Trial Production in November ] Yunnan Yuxi Xianfu Steel (Group) Co., Ltd. (hereinafter "Xianfu Steel") is currently accelerating construction of its supporting 1-million mt/year coking project, targeting trial production this November. Overall project completion now stands at roughly 80%, with cumulative investment reaching 1.5 billion yuan. 04 ★★ [Shandong Province Coal Mine Capacity Status] In accordance with the requirements of the National Energy Administration's Notice on Establishing a Coal Mine Capacity Registration and Public Announcement System (GN Coal [2013] No. 476) and Notice on Improving the Coal Mine Capacity Registration and Public Announcement System to Carry Out Public Announcements for Coal Mines Under Construction (GN Coal [2017] No. 17), the production and construction coal mine capacity status across the province is hereby announced as follows: As of June 30, 2026, Shandong Province has 76 legally operating or under-construction coal mines, with a total annual capacity of 113.57 million mt. Among these, there is 1 coal mine under construction with a construction scale of 450,000 mt/year, and 75 operating coal mines with a registered production capacity of 113.12 million mt/year. 05 ★★ [ CPCA: China Passenger Car Market Retail Sales Down 23.2% YoY, Up 6.1% MoM in June ] Data released by the China Passenger Car Association (CPCA) shows that nationwide passenger car retail sales reached 1.602 million units in June, down 23.2% YoY and up 6.1% MoM. Year-to-date cumulative retail sales hit 8.701 million units, down 20.2% YoY. Passenger NEV retail sales reached 1.007 million units in June, down 9.4% YoY but up 6.0% MoM. For January-June, passenger NEV retail sales totaled 4.704 million units, down 14.0% YoY. Retail sales of conventional internal combustion engine passenger cars reached 600,000 units in June, down 39% YoY but up 6.3% MoM. Notably, sales of standard hybrid models fell only 7% YoY while surging 24% MoM, a standout performance. ★ Other Hot Topics ★ ⭕ [China Energy Group's Coal Port Departures and Arrivals Both Hit Record Highs in H1] As of June 30, the port segment of China Energy Group has completed cumulative coal arrivals of 148.009 million mt and coal port departures of 147.1 million mt. The group's coal port arrivals and departures both reached new all-time highs for the same period in H1, effectively ensuring smooth and efficient operation of the critical energy transportation channel. Since the beginning of this year, the port subsidiary of China Energy Group has optimized production organization, unlocked port capacity, coordinated resource allocation across three ports, innovated operation models and loading/unloading processes, increased the direct loading ratio and circulation efficiency, and simultaneously expanded market coal transshipment business, driving a steady rise in throughput. In the area of equipment support, it has fully implemented a production equipment full life cycle management system, adopted refined maintenance standards and grid-based accountability mechanisms, built a real-time condition monitoring platform for key equipment, and achieved equipment fault prediction and early warning. This has driven a comprehensive transformation and upgrade of the operation and maintenance model from "reactive repair" to "proactive defense," solidifying the hardware foundation for continuous and stable production. [Turkey Initiates Sunset Review of Anti-Dumping Duties on Vietnamese Stainless Steel Pipes] On July 3, 2026, the Turkish Ministry of Trade issued Communiqué No. 2026/27, announcing the initiation of the first sunset review of anti-dumping duties on stainless steel pipes and other hollow structural profiles originating in Viet Nam, following an application by a domestic producer. The products in question are classified under Turkish Customs Tariff numbers 7306.40.20.90.00, 7306.40.80.90.00, and 7306.61.10.00.00. During the investigation, the current anti-dumping duties will remain in effect. The communiqué takes effect on the date of its publication. *This report is an original work and/or compilation work of SMM Information & Technology Co., Ltd. (hereinafter referred to as "SMM"), which legally holds the copyright and is protected by the Copyright Law of the People's Republic of China, among other laws and regulations, and applicable international treaties. Without written permission, no part of the above content may be reproduced, modified, sold, transferred, displayed, translated, compiled, disseminated, or disclosed to a third party in any form, nor may any third party be licensed to use it. Otherwise, upon discovery, SMM will resort to legal means to pursue liability for infringement, including but not limited to demanding liability for breach of contract, the return of unjust enrichment, and compensation for direct and indirect economic losses. Any or all information contained in this report, including but not limited to news, articles, data, charts, images, sounds, videos, logos, advertisements, trademarks, trade names, domain names, layout designs, etc., is protected by the Copyright Law of the People's Republic of China, the Trademark Law of the People's Republic of China, the Anti-Unfair Competition Law of the People's Republic of China, and other laws and regulations, as well as applicable international treaties concerning copyrights, trademark rights, domain name rights, commercial data information property rights, and other rights, and is owned or held by SMM and its relevant rights holders. 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[SMM Coke and Coking Coal Daily Briefing] Coking Coal Market: Low-sulphur coking coal in Linfen is quoted at 2,050 yuan/mt. Coking coal side, supply disruptions at production sites are frequent, production resumptions are progressing slowly, and resources remain tight. Recently, arrivals at downstream coke enterprises have improved, and coupled with rising resistance to high prices, purchases by steel mills and traders are trending cautious. Coal mine shipments have weakened, and bids lack the momentum to rise. However, inventory at most mine sites is low, and mines are firmly holding prices steady, keeping mainstream coal prices free from significant declines, with only some high-priced coal undergoing slight corrections. Coke Market: The nationwide average price of quasi-first-grade metallurgical coke - dry quenching is 2,090 yuan/mt. Supply side, coke enterprises currently have moderate profits, and production willingness has edged up slightly, keeping coke supply steady. However, arrivals at downstream steel mills have improved, and rigid demand for coke has weakened, with shipments from many producers slowing, causing supply-demand conditions to ease marginally. Demand side, the plum rain season has ended in east and south China, but high temperatures persist, and demand for finished steel has not recovered. Multiple rounds of coke price increases have squeezed steel mill profits, and with peak rigid demand having passed, steel mills are cutting purchase volumes. Overall, hot metal output is expected to pull back, and steel mills' purchase willingness is declining, so coke prices are likely to remain stable in the short term.[SMM Steel]

The National Energy Administration (NEA) recently released the "Guidelines for Data Classification and Grading in the Energy Sector (2026 Edition)," which took effect on July 1, 2026. The guidelines apply to the classification and grading of non-confidential data in the energy sector within the territory of the People's Republic of China, aiming to standardize data processing activities in the energy sector and strengthen data security management. According to the document, the classification dimensions for energy sector data include energy types, energy activities, and others. Specifically, by energy type, the first-level data classification includes coal, oil, natural gas, nuclear energy, hydropower, wind energy, solar energy, biomass energy, geothermal energy, ocean energy, electricity, hydrogen energy , etc. This means hydrogen energy has been formally incorporated into the first-level data classification system of the energy sector. By energy activity, the second-level data classification includes planning, design, construction, production, storage and transportation, consumption, scientific research, etc. Data processors in the energy sector may further implement third-level and fourth-level classification management based on data content and characteristics. In terms of data grading, the guidelines specify that energy sector data is classified into three levels—general data, important data, and core data—based on factors such as importance, accuracy, scale, and security risks. Derivative data generated through processing such as statistics, correlation, mining, and aggregation of important data or core data, if still recoverable or restorable to important or core data, shall in principle be managed at the original level. The document also proposes that if data, after desensitization processing, cannot be recovered or restored to important or core data, the relevant data may be downgraded in accordance with the rules. Specifically, core data may be downgraded to important data or general data, and important data may be downgraded to general data. The guidelines provide explicit provisions on the identification rules for important data and core data in the energy sector. Geographic location coordinates data with an accuracy better than or equal to 100 meters for certain important energy infrastructure, as well as materials containing such coordinates data, are classified as important data in the energy sector. Such infrastructure includes coal mines with an annual output of 10 million mt or more, thermal power stations, hydropower stations, and nuclear power stations of specific scales, and substations, switching stations, and converter stations above 750 kV. Real-time command data for the production and operation of certain energy infrastructure are also included in the scope of important data, including those from hydropower stations of specific scales, substations and converter stations above 750 kV, and relevant data from the dispatch and control system of the Oil & Gas Control Center of PipeChina. In terms of power consumption data, the raw power consumption data of super important power users, first-level and second-level important power users in the national defense and military category, as well as the raw power consumption data of 10 million or more power users, are recognized as important data in the energy sector. The raw power consumption data of super important power users for a continuous period of one year or more, and the raw power consumption data of 100 million or more power users, are classified as core data in the energy sector. A relevant official of the NEA stated that the guidelines were issued to promote the implementation of the Data Security Law of the People's Republic of China in the energy sector, and together with the "Data Security Management Measures for the Energy Sector (Trial)," they form the basic management system for data security in the energy sector. The guidelines will guide data processors in classifying and grading the non-confidential data they hold in the energy sector, accurately identifying important data and core data, and strengthening management and security protection as required. Regarding the follow-up work for energy sector data processors, the NEA proposed that they should identify and compile a catalogue of important data for their organization in the energy sector in accordance with the guidelines, and submit it as required to the provincial energy regulatory authorities at the location of the data carrier. If significant changes occur to the catalogue, it should be resubmitted within three months. At the same time, relevant entities shall establish and improve data security management systems, define data lifecycle management requirements, adopt necessary technical measures, and implement institutional requirements such as graded protection of cybersecurity, security protection of critical information infrastructure, cryptographic protection, and confidentiality, to ensure that important data and core data in the energy sector are in a state of effective protection and lawful utilization. The document also requires that processors of important data and core data conduct at least one risk assessment of their data processing activities each year, which may be carried out by themselves or commissioned to third-party institutions with risk assessment capabilities, and submit the assessment reports as required by provincial energy regulatory authorities. Where cross-border transfer of important data or cross-entity transfer of core data is involved, a risk assessment shall be applied for in accordance with relevant regulations. The NEA stated that the identification rules for important data and core data in the energy sector are not fixed. Going forward, they will be continuously analyzed and assessed in light of developments in the national security situation and data security management needs, and will be revised and improved when appropriate.

★ Macro ★ 01 ★★ [June China Warehousing Index Returns to Expansion Territory] The China Federation of Logistics and Purchasing released the June China Warehousing Index. With the concentrated commencement of major infrastructure projects nationwide and the simultaneous recovery of supply and demand in manufacturing, warehousing business demand improved noticeably, and the index returned to expansion territory. The June China Warehousing Index stood at 50.2%, up 0.6 percentage points MoM. 02 ★★ [ PBOC Net Withdrawal of 59.5 Billion Yuan via Open Market Operations ] The People's Bank of China (PBOC): Today, it conducted a 10 billion yuan 7-day reverse repo operation, with a bid amount of 10 billion yuan, an awarded amount of 10 billion yuan, and an operation rate of 1.40%, unchanged from the previous level. As 69.5 billion yuan of 7-day reverse repos matured today, a net withdrawal of 59.5 billion yuan was recorded on the day. 03 ★★ [ PBOC Governor Pan Gongsheng: Supports HKMA in Raising RMB Business Funding Arrangement from 200 Billion Yuan to 500 Billion Yuan ] Pan Gongsheng, Governor of the People's Bank of China, stated on July 7 at the "Hong Kong Fixed Income and Currency Summit cum Bond Connect Forum" that Hong Kong is the world's largest offshore RMB business center. To further develop the RMB offshore market, liquidity supply is a fundamental arrangement. In recent years, the People's Bank of China has coordinated the role of RMB clearing banks and currency swap arrangements to provide stable RMB liquidity support for the Hong Kong offshore market. Previously, the People's Bank of China signed an 800 billion yuan standing swap arrangement with the HKMA, and also upgraded and established an RMB business funding arrangement totaling 200 billion yuan, providing a stable and relatively low-cost source of medium and long-term RMB funds for commercial banks in Hong Kong. Pan Gongsheng stated that on this basis, he supports the HKMA in increasing the size of the RMB business funding arrangement from the current 200 billion yuan to 500 billion yuan, and extending the usage period to no more than three years. 04 ★★ [ SAFE Releases Foreign Exchange Reserve Data for End-June 2026 ] Data from the State Administration of Foreign Exchange (SAFE) showed that as of the end of June 2026, China's foreign exchange reserves stood at $3,416.3 billion, down $26 billion from the end of May, a decline of 0.75%. In June 2026, influenced by macroeconomic data from major economies, the monetary policies and expectations of major central banks, and other factors, the US dollar index rose, while major global financial asset prices showed mixed performance. The combined effects of exchange rate translation and changes in asset prices led to a decline in foreign exchange reserves for the month. China's economy is generally stable and developing with innovation and quality, which is conducive to the basically stable scale of foreign exchange reserves. ★ Industry and Downstream ★ 01 ★★ [June Sales of Various Excavators Total 25,445 Units] According to data released by the China Construction Machinery Association on Tuesday, 25,445 units of various excavators were sold in June, up 35.3% YoY. Of which: domestic sales were 10,898 units (including 65 electric excavators), up 33.9% YoY; exports were 14,547 units (including 34 electric excavators), up 36.4% YoY. 02 ★★ [Global New Ship Order Tracking (June 29–July 5)] According to tracking by International Ship Network: from June 29 to July 5, 2026, global shipyards received a total of 68+4 new ship orders. Of which, Chinese shipyards received 57+4 new ship orders; Japanese shipyards received 3; South Korean shipyards received 4; and Philippine shipyards also received relevant new ship orders. 03 ★★ [ Da-Qin Railway: June Cargo Transport Volume of Da-Qin Line at 36.89 Million mt ] Da-Qin Railway announced that in June 2026, the company's core operating asset, the Da-Qin Line, completed a cargo transport volume of 36.89 million mt, up 13.79% YoY; the daily average volume was 1.2297 million mt. The daily average number of heavy-haul trains operated on the Da-Qin Line was 86.9, of which the daily average number of 20,000-tonne trains was 61.1. In January-June 2026, the cumulative cargo transport volume on the Da-Qin Line reached 204 million mt, up 7.96% YoY. 04 ★★ [Xuanwei Laibin Guangming Coal and Power No.1 Mine Ordered to Suspend Production for Rectification] Recently, the Yunnan Bureau of the National Mine Safety Supervision Administration issued an official notice, stating that due to multiple major accident hazards at the No.1 Mine of Yunnan Xuanwei Laibin Guangming Coal and Power Co., Ltd., and the illegal organization of production with existing problems, the regulatory authorities ordered the mine to suspend production for rectification in accordance with the law. It is understood that from June 11 to 13, 2026, the Yunnan Bureau of the National Mine Safety Supervision Administration conducted an on-site inspection of the No.1 Mine of Yunnan Xuanwei Laibin Guangming Coal and Power Co., Ltd. and found that the mine was still organizing production despite major accident hazards such as "falsifying drawings, concealing mining faces, and continuing production; and failure to install safety monitoring and personnel position monitoring systems in the coal mine." 05 ★★ [One Residential Plot in Hangzhou Sold at 26.68% Premium] On July 7, a residential plot in the Xiaoshan Century City core unit, Hangzhou, was transferred, with a land area of 34,167.00 m², planned building area of 95,667.60 m², plot ratio of 2.8, starting price of 3.635 billion yuan, and starting floor price of 38,000 yuan/m². After 98 rounds of bidding, Poly Development finally won the plot for a total price of 4.605 billion yuan, with a transaction floor price of 48,139 yuan/sq m and a premium rate of 26.68%. ★ Other Hot Topics ★ ⭕ [HBIS Releases Full-Scene Solution for High-End Green Metal Decoration Materials] The opening of the exhibition hall and the release of the solution represent HBIS’s practical commitment to deepening its green and low-carbon transformation, implementing the national “2024-2025 Energy Conservation and Carbon Reduction Action Plan,” the “Implementation Plan for High-Quality Development of the Green Building Materials Industry,” and the deployment for high-quality development of the new materials industry in Hebei province. It is another landmark practical achievement for HBIS in the transformation and upgrading process from “steel to materials” and “manufacturing to service,” leveraging its advantages across the entire industry chain to precisely address core client needs, actively overcome industry development bottlenecks, and lead the industry’s high-end upgrade. ⭕[Guizhou Province Coal Mine Enterprise Safety Production Permit Application Status] According to relevant regulations, following the decision made at the Party Leadership Group meeting of the Guizhou Provincial Energy Administration on June 30, 2026, approval was granted for the extension/renewal or issuance of safety production permits for the following: Guizhou Bangda Energy Development Co., Ltd., Shuicheng District Shaomi Laodigou Coal Mine; Guizhou Pannan Coal Development Co., Ltd., Xiangshui Mine Jiuwuji Well Area; and Zunyi Bozhou District Sheng’an Coal Industry Co., Ltd., Zunyi County Panshui Town Xing’an Coal Mine. ⭕[Jilin Province Coal Mine Capacity Status for H1 2026] In accordance with the requirements of the “Notice of the General Office of the National Energy Administration on Improving the Coal Mine Capacity Registration and Announcement System for Carrying Out Construction Coal Mine Capacity Announcements” (Guonengfa Coal [2017] No. 17), the capacity status of legal construction coal mines with reported construction commencement information and complete mining licenses and business licenses, as well as legal production coal mines with complete mining licenses, safety production permits, and business licenses, as of June 30, 2026, is hereby announced. *This report is an original work and/or compilation created by SMM Information & Technology Co., Ltd. (hereinafter referred to as “SMM”), and SMM legally holds the copyright, which is protected by the Copyright Law of the People’s Republic of China and other applicable international treaties. Without written permission, no part may be reproduced, modified, sold, transferred, displayed, translated, compiled, disseminated, or otherwise disclosed to any third party or licensed for use by any third party. If any violation is discovered, SMM will pursue legal liability for infringement, including but not limited to requiring the assumption of contractual breach liability, restitution of unjust enrichment, and compensation for direct and indirect economic losses. All content contained in this report, including but not limited to any or all information such as news, articles, data, charts, pictures, sounds, videos, logos, advertisements, trademarks, trade names, domain names, and layout designs, is protected by the Copyright Law of the People’s Republic of China, the Trademark Law of the People’s Republic of China, the Anti-Unfair Competition Law of the People’s Republic of China, and other applicable laws and international treaties concerning rights such as copyright, trademark rights, domain name rights, commercial data information property rights, and other rights, and is owned or held by SMM and its relevant rights holders. Without written permission, no organization or individual may reproduce, modify, use, sell, transfer, display, translate, compile, disseminate, or otherwise disclose the above content to any third party or permit third-party use. Upon discovery of such violations, SMM will pursue legal remedies for infringement, including but not limited to demanding contractual liability for breach of contract, restitution of unjust enrichment, and compensation for direct and indirect economic losses. The views expressed in this report are based on market-collected information and a comprehensive assessment by the SMM research team. The information provided in this report is for reference only and at your own risk. This report does not constitute direct investment research advice. Clients should make decisions prudently and not use this as a substitute for their independent judgment. Any decision made by the client is unrelated to SMM. Furthermore, SMM is not responsible for any losses or liabilities arising from unauthorized or illegal use of the views in this report. SMM reserves the right to modify and ultimately interpret the terms of this statement.